Dec. 11 (Bloomberg) -- Jos. A. Bank Clothiers Inc. and
Men’s Wearhouse Inc. agree they should join forces. Both also
agree it’s worth taking on $1 billion or more in debt to create
one of the largest U.S. clothing retailers. They just don’t
agree who should run it.

Each company has taken shots at the other since Jos. A.
Bank offered to buy Men’s Wearhouse in October for $2.3 billion.
Men’s Wearhouse ignored the proposal and last month turned the
tables by making a bid to buy Jos. A. Bank for about $1.54
billion. Jos. A. Bank hasn’t responded to that offer.

It’s not unusual for executives to resist takeovers to save
their jobs. What’s complicating this battle is that each side
has made the case in recent months that it’s the superior
retailer -- pitting Men’s Wearhouse Chief Executive Officer
Douglas Ewert against Jos. A. Bank Chairman Robert Wildrick.
That has exacerbated tension between the two management teams
that is preventing a deal from being actively discussed, say
people familiar with the matter.

“If Bank’s executives accept the offer, they will make
some money but they will lose their jobs,” Stifel Nicolaus &
Co. analyst Richard Jaffe said in a telephone interview. “Men’s
Wearhouse probably has better management -- and they think
they’ve got better management, too.”

Derided Discounting

Aaron Palash, an outside spokesman working for Men’s
Wearhouse, declined to comment, as did Molly Morse, an outside
spokeswoman for Jos. A. Bank. On the company’s earnings call
last week, Jos. A. Bank Chief Executive Officer Neal Black would
not give a timeline for responding to Men’s Wearhouse’s $55-a-share bid, and also said his company had potential acquisitions
in mind.

The strain between the companies has played out in dueling
statistics with curt language mixed in. Jos. A. Bank said Men’s
Wearhouse rejection of its overture was a “formulaic, knee-jerk
reaction.”

Men’s Wearhouse has derided its competitor’s discounting
strategy. In an October investor presentation, Men’s Wearhouse
displayed a slide saying that Jos. A. Bank’s “Buy 1, Get 7
Free” strategy of selling suits “confuses its customers” who
are now “accustomed to significant discounts and do not
understand or focus on quality.”

In a promotion late last year, Jos. A. Bank offered buyers
two suits, two shirts, two ties and a smartphone for each
regular-priced suit they bought.

In the October presentation, Men’s Wearhouse made the case
that CEO Ewert has done a better job of running his company than
Jos. A. Bank management has done with theirs. Since he took over
in June 2011, it said, the company’s earnings growth has
exceeded Jos. A. Bank’s while shareholders have gotten a 56
percent return under Ewert, compared with a 6.7 percent return
for its rival during the same period.

Sniping Continues

For its part, Jos. A. Bank’s original offer letter proposed
that its Chairman Wildrick would be the chief executive officer
of the combined company, said one person familiar with the
matter.

In an interview in October, Wildrick said that his
company’s financial results over the past decade surpassed its
competitor as measured by metrics including margins and return
on assets. Jos. A. Bank’s operating margin over the last three
years averages 15 percent, compared with about 8.7 percent at
Men’s Wearhouse, data compiled by Bloomberg show.

On the company’s earnings call last month, the sniping
continued.

“Last week, we received an unsolicited nonbinding
acquisition proposal from Men’s Wearhouse,” said Bank CEO
Black. “So, despite the fact that they would not engage in
discussions with us before, it seems they now agree that a
combination of our companies make sense.”

Eminence’s Urging

Jos. A. Bank has offered to retain some Men’s Wearhouse
managers in a combination, and said it could even keep some of
its managers to run the combined company. Wildrick also struck a
collaborative tone when he said that he did not plan on closing
Men’s Warehouse stores in the event of a transaction.

Both stocks are higher on the possibility of a deal.
Pressure from Eminence Capital LLC, a hedge fund that owns 9.8
percent of Men’s Wearhouse as well as a stake in Jos. A. Bank,
could be the trigger that makes it happen as they and other
shareholders pressure a board to make top managers step aside,
one of the people said.

Investors may prefer Men’s Wearhouse as the buyer because
the combined company would emerge with less debt, analyst Jaffe
said. Either way, the combination of the two companies could
yield benefits in cost savings and expanded sales, Jaffe has
said.

Before terms can be discussed, someone has to welcome a
buyout.

“It’s a fight over who controls it,” said Keith Moore, a
strategist at MKM, a Stamford, Connecticut, research firm.
“There will be one group that is dominant and one that is slave
and that’s what the fight is over.”